Industrial metallurgical holding1H 2018

IFRS Financial Results

23.08.2018

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DISCLAIMER

FINANCIAL POSITION

157

204

314

358245

250

358 391

2015 2016 2017 1H 2018

METCOKE, CFR INDIA PIG IRON, FOB BLACK SEA

*Adjusted (loan covenant) EBITDA is calculated as earnings before income tax, interest expense, exchange gain/loss, depreciation, amortization, impairment and other non-cash items** As at December 31, 2017.

4

1H 2018 KEY FINANCIAL HIGHLIGHTS

1H 2018 1H 2017 Change,%

Revenue 43,184 43,435 (1)

Cost of sales (28,470) (28,738) (1)

EBITDA 9,024 9,279 (3)

EBITDA margin, % 21 21 -

Adjusted EBITDA LTM* 18,754 19,001 (1)

Adj. EBITDA margin, % 23 24 -

Profit for the period 2,063 4,314 (52)

Profit margin, % 5 10 -

IFRS financial highlights, RUB mln

Capex (5,053) (5,253) (4)

Total Debt 65,850 59,015** 12

Short term debt 11,788 10,769** 9

Cash & equivalents 12,103 8,978** 35

Net Debt 53,747 50,037** 7

Net Debt/ Adjusted EBITDA 2.87 2.59 -

Revenue, RUR mln

Prices for major products,$US / ton

Source: SBB, Metal Courier

Net cash from operating activities

10,552 4,854 117

Free cash flow 5,499 (399) -

5 706

10 602 10 040

20% 24%23%

0%

5%

10%

15%

20%

25%

30%

0

2 000

4 000

6 000

8 000

10 000

12 000

1H 2016 1H 2017 1H 2018

EBITDA Adj EBITDA Adj Margin, %

Adjusted EBITDA & margins,RUR mln

28 283

43 435 43 184

1H 2016 1H 2017 1H 2018

1H 2018

1H 2017

1H 2018

1H 2017

Coke Pig iron Coal Other

25%

50%

17%

8%22%

64%

5%

9%

Coke

Pig iron

Coal

Other

5

REVENUE & COGS COMPOSITION

Cost of sales breakdown

Revenue by product

1H 2018 (outer circle)

1H 2017 (inner circle)

Revenue by area

Export

Domestic

72%

24%

1%

18%33%

4%

30%

17%15%

23%

28%

18%

40%

37%

63%

30%

70%

Domestic sales

Export sales

1H 2017 (inner circle)

1H 2018 (outer circle)

79%

12%

4%

2%

3%

74%15%

5%

2%

4%

Raw materials and supplies

Wages and salaries includingassociated taxes

Depreciation of PP&E

Energy

Other

1H 2017 (inner circle)

1H 2018 (outer circle)

81%

1%

25%

9,024

9,279

5,405

3,344

4,390

21,021

43,184

EBITDA bridge

1H 2018 EBITDA

Other

General and administrativeexpenses

Wages & salaries

Raw materials&supllies

Revenue

1H 2017 EBITDA

49%

40%

11%22%

23%

53%

2%

EBITDA by segment

Coal

Coke

Ore& Pig iron

Other

6

EBITDA COMPOSITION

EBITDA by segment, RUR mln 1H 2018 1H 2017 Change, %

Coal 2,010 4,552 (56)

Coke 2,107 3,705 (43)

Ore& Pig iron 4,739 1,032 359

Other 168 (10) -

Total 9,024 9,279 (3)

1H 2017 (inner circle)

1H 2018 (outer circle)

• Revenue and EBITDA maintain record high levels achieved in 1H 2017 despite temporary technical issues which are currently resolved

• Ore & Pig iron segment enjoys comfortable market conditions arisen from by the new Trade legislation supporting domestic EAF steel production in USA and exchange differences favorable for exporters

EBITDA y-o-y change

RUR mln

EBITDA margin 21%

EBITDA margin 21%

(1)%Y-o-Y change

(7)%Y-o-Y change

24%Y-o-Y change

13%Y-o-Y change

9%Y-o-Y change

1,3484,234

11,2987,572

4,173 2,756

4,130

30,126

2018 2019 2020 2021 2022 2023-2024

Bank loans Eurobond

(US$ 66 mln)

(US$ 480 mln)

*Management accounts 7

WELL-BALANCED DEBT PORTFOLIO*

64%

36%

US$ debt RUR debt

89%

11%

Long term Short term

Long-term and short-term debt Debt by currencyDebt portfolio by sources

Maturity*

IFRS Debt portfolio parameters 1H 2018

Net debt RUR 53,747 mln

Average interest rate* 8.14%

Confirmed undrawn facilities as of 30.06.2018* RUR 50,782 mln

52%

22%

14%

6%

3% 3%

Eurobond

Sberbank

Gazprombank

Alfa

EABR

VTB & other

8

1H 2018 OPERATIONAL RESULTS

13791202 1219

2476

110112011147

1259 1338

2581

11301163

Coal, kt. Coal concentrate,kt.

Coke, kt. Iron ore, kt. Iron oreconcentrate, kt.

Pig iron, kt.

1H 2018 1H 2017

• In 1H 2018 coking coal production 20% higher due to gradual ramp-up of the second stage of Butovskaya and Tikhovamines

• Pig iron production at Tulachermet increased due to successful modernization of the blast furnace No.3 in 2017

• Coal concentrate production 4% less due to processing of new grades of coal from Tikhova mine. Plant modernization, scheduled for the second half of 2018, will increase its productivity

Development in the reporting period • A number of technical problems at Butovskaya mine solved, the quality of the coal produced increased

• Kombinat KMAruda develops the second mining stage to ramp up capacity of iron ore production from 4.8 to 7 million tons. With the use of new capacities, iron ore production growth will occur as early as 2019

• About 70 activity issues are scheduled to improve production efficiency

• Annual savings from the Total Optimization Program aimed to encourage employees’ work-improvement initiatives, exceed 1.3 billion rubles (management accounts)

• Butovskaya mine introduced an advanced system for accurate positioning of personnel and transport. Due to its use, production safety and efficiency has been increased significantly

• Consolidated system of procurement and inventory management introduced to save significant funds due to the competent distribution of materials and resources

Appendix

*Actual interest rate of the notes is 7.5%

10

INTERNATIONAL CREDIT RATINGS – CONFIRMED IN 2018

B(stable)May 2018

B2(positive)

June 2018

B(stable)May 2018

«Diminished liquidity risk following placement of USD500 million 7.75% notes* due 2022. Liquidity ratio improved to well above 2x, a level more commensurate with the current rating level. Debt repayments remain at manageable levels of around RUB 2 billion in 2017 and RUB 9 billion in 2018»

− Fitch Ratings

June 2017

«As the agency rated the market and competitive positions, it took account of the fact that the company is the largest supplier of commercial pig iron with a share of about 16% in 2017».

-National rating from Expert RA

«Upgrade reflects our view on improved liquidity and capital structure. The company's short-term debt maturities declined to RUB 5 billion (about $83 million) from over RUB 17 billion (over $290 million). We also recognize solid operating and financial performance and further improvement in credit metrics».

− Standard & Poor’s

July 2017

(stable)

«Vertical integration supports capacity utilization through the cycle. Financial metrics will continue to improve. Coal production will double in two years. liquidity is sufficient to cover the company’s debt maturities and other obligations until at least the end of 2018».

− Moody’s Investors Service

June 2017

(1) Totals may not equal 100% due to rounding(2) Share in pig iron export sales by volume through Alpicom trader

11

DIVERSIFIED AND STABLE CUSTOMER BASE

IMH key export markets (merchant pig iron)

Traders – 74%

.

Key customers in 2017 (merchant pig iron)

End users – 26%

Saudi ArabianDuctile

.

IMH pig iron export sales(1,2)

13% 7% 8% 8% 8% 7%

46%

36% 29% 29% 27% 23%

7%

8% 18%25%

13%12%

34%49% 45%

38%52% 58%

2012 2013 2014 2015 2016 2017

Asia Europe Turkey and Middle East USA

• Pig iron is an essential additive to raw material for quality steel production with no adequate substitute product

• Total Russia’s share of the global merchant pig iron market is 39% with only two strong suppliers

• Other suppliers of merchant pig iron are unable to meet the demand on the back of numerous closures both connected with bankruptcy during the times of low demand (Brazilia) and environment protection initiatives (China)

Source: Metall Expert, Company Data

12

IMH’S MARKET SHARE ON CORE MARKETS

(1) Export sales of pig iron data include sales of Alpicom

Koks44%

Altai-Koks33%

Moscow Coke Plant

19%

Other4%

* According to Metall Expert, merchant pig iron market in 2017 accounted to around 12 mln t

IMH is the leader among Russia’s merchant coke exporters

Koks34%

Altai-Koks25%

Evraz9%

Gubakhinskiy9%

Mechel Coke9%

Moscow Coke Plant8%

Other6%

IMH is the main Russia’s supplier of merchant coke

Ural Steel

Tulachermet (1)

Russia, otherCIS, other

South America

Asia-Pacific Region

Western Europe

Other regions

Merchant pig iron global market*, main participants

Source: Metall Courier, SBB

13

MAIN MARKET PRICE PROCESS TRENDS

Current price trends

Pig iron prices are at their 3-year heights due to:

(1) Closure of ineffective blast furnaces in China

(2) Growing demand from the side of EAF-plants in US on the back of 232 Article on the Trade Legislation adoption

(3) Low inventories

(4) Less supply volumes available on the market

Pig iron is sold with premium due to its high end-user performance.

Tulachermet’s product is a preferable product due to the low contents of sulfur and phosphorus.

0

10

20

30

40

50

60

70

80

0

50

100

150

200

250

300

350

400

450

I кв 2015

II кв 2015

III кв 2015

IV кв 2015

I кв 2016

II кв 2016

III кв 2016

IV кв 2016

I кв 2017

II кв 2017

III кв 2017

IV кв 2017

I кв 2018

II кв 2018

Pig iron (FOB, EU, USA) Iron ore concentrate (CFR, China) Coking coal (CFR, China)

Coke (CFR, India) Exchange rate (right scale)

3,823,68

2,45 2,42

3,413,40

3,52

2,36 2,29

2,51

3,75 3,55

2,37 2,32

2,97

1,50

2,00

2,50

3,00

3,50

4,00

4,50

2013 2014 2015 2016 2017

$ Price for 1% Fe in raw materials

Pig iron (FOB, EU США) HBI (CFR, Italy) Scrap (CFR, Turkey from USA), USA)

1 661 1 7471 889

2 207

2 830

2013 2014 2015 2016 2017

2 098

2 184

2 059

2 212

2 276

2013 2014 2015 2016 2017

2 201

2 181

2 227

2 249 2 250

2013 2014 2015 2016 2017

4 828

4 885

4 962

5 023

5 100

2013 2014 2015 2016 2017

14

OPERATIONAL RESULTS DYNAMICS

Historical record

Coal, kt Coal concentrate, kt Coke, kt

Iron ore, kt Iron ore concentrate, kt Pig iron, kt

2 403 2 4122 201

2 6372 468

2013 2014 2015 2016 2017

2 552 2 6012 727 2 824

2 700

2013 2014 2015 2016 2017

Industrial metallurgical holdingManagement company

115419, Moscow, Russia2nd Verkhniy mikhailovskiy proezd, 9

Sergey FrolovVice president, strategy & communications

Tel.: +7 (495) 725-56-80 #156frolov@metholding.comwww.metholding.ru